There is a saying, “It takes one to know one.” I am a convicted felon, former CPA, and former criminal CFO of Crazy Eddie. Today, I teach law enforcement agencies, professionals, and businesses how to identify fraud and train them to catch the crooks. This blog investigates white-collar crime, securities fraud, accounting irregularities, corruption, and other related topics. Accounting irregularities investigated by me are referred to appropriate government agencies as a whistleblower.

Sunday, October 19, 2008

Why White Collar Criminals Do Not Fear Today's FBI

As the heartless cold blooded criminal CFO of Crazy Eddie, the Federal Bureau of Investigation was a respected adversary that filled my stomach with butterflies and caused me many sleepless nights as I feared their tenacity to successfully investigate my crimes. Unfortunately, the white collar criminals of today have much less to fear from the FBI. According to anarticle in the New York Times:

The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis, according to current and former bureau officials.

The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the nation’s economic woes.

The pressure on the F.B.I. has recently increased with the disclosure of criminal investigations into some of the largest players in the financial collapse, including Fannie Mae and Freddie Mac. The F.B.I. is planning to double the number of agents working financial crimes by reassigning several hundred agents amid a mood of national alarm. But some people inside and out of the Justice Department wonder where the agents will come from and whether they will be enough.

Even if the FBI doubles the number of agents working financial crimes, it does not solve the main problem of effectively investigating white collar crime. White collar crime investigations are often complicated cases, take long periods of time, require enormous resources, and most importantly, experienced agents.

Top-notch, experienced FBI agents are leaving the Bureau for higher paying private industry jobs as soon as they qualify for retirement causing a brain drain within the FBI. As white collar crime is becoming increasingly complex, our government must revise employee retention policies to compete with the private sector.

The FBI lacks adequate legal, technological, and personnel resources to meet its responsibilities to investigate white collar crime. According to the New York Times article:

From 2001 to 2007, the F.B.I. sought an increase of more than 1,100 agents for criminal investigations apart from national security. Instead, it suffered a decrease of 132 agents, according to internal F.B.I. figures obtained by The New York Times. During these years, the bureau asked for an increase of $800 million, but received only $50 million more. In the 2007 budget cycle, the F.B.I. obtained money for a total of one new agent for criminal investigations.

Too often, complicated white collar crime investigations fall apart because the FBI lacks experienced agents with the patience, knowledge, and experience to put together a successful criminal investigation. According to the New York Times article:

In some instances, private investigative and accounting firms are now collecting evidence, taking witness statements and even testifying before grand juries, in effect preparing courtroom-ready prosecutions they can take to the F.B.I. or local authorities.

“Anytime you bring to the F.B.I. a case that is thoroughly investigated and reduce the amount of work for investigators, the likelihood is that they will take the case and present it for prosecution,” said Alton Sizemore, a former F.B.I. agent who is a fraud examiner for Forensic Strategic Solutions in Birmingham, Ala.

In other words, in order for the FBI to give serious consideration to many cases, they must be presented to them neatly gift wrapped on a silver platter.

The criminals of today are elated by an under-resourced and relatively inexperienced FBI. As a result, the cancer of white collar crime continues to destroy the integrity of our great capitalist economic system.

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New Jersey State Assembly Republican Policy Committee (08/17/09)

“White collar crime is more brutal than violence crime. The actions of one or a few corrupt public officials and corrupt businessmen affect the livelihoods of thousands of people. Treat them with the same disdain as we do treat serial killers because white collar criminals are economic predators. We are serial economic predators." -- Testimony of Sam Antar